CYPRUS recorded the third highest increase in unemployment in the EU, after Spain and Greece, reported the EU Employment and Social Situation Review. Jobless numbers were up by 3.2 percentage points in July 2012 compare to July 2012. According to data released on Thursday, the seasonally adjusted number of registered unemployed rose by 1,286 reaching 38,253, while Eurostat reported the August figure for jobless at 11.7 percent.
It is almost certain that we will break the 12 per cent barrier in the next month or two, as cash-strapped businesses continue to cut jobs in order to stay afloat. The number of long-term jobless would go over the 40,000 mark if the government proposals, unveiled on Thursday are implemented. With their heavy emphasis on higher taxes and increased charges for government services, the proposals would not only reduce the liquidity of the market but also increase operating costs for businesses at a time when most are suffering heavy losses.
This would inevitably force businesses to make more redundancies as price rises in a recession usually lead to loss of revenue. Job cuts will almost certainly outnumber the creation of new jobs if there are any. It is ironic that the government that insists the memorandum of understanding with the troika had to include provisions for development and job creation has prepared a package of measures that not only would prevent growth, but put us deeper into recession through tax increases.
We could have expected nothing more from a government that pays lip service to the need to tackle rising unemployment while taking measures that assist its rise. This is the government which, a few months ago, with unemployment at record levels (still lower than now) increased the statutory minimum wage, pricing more workers out of the market! It is the same government that has been making a big issue about CoLA, a measure that erodes the competitiveness of businesses and pushes up prices, while primarily benefiting the highest-paid, broader public sector workers.
Was safeguarding CoLA so important that the president had to state he would not sign a memorandum that envisaged its abolition? It was not, but he had to pander to the unions, with which he so closely identifies, in some way, now that the foundations of the highly inflexible labour market are collapsing and union power has been drastically weakened. With its counter proposals the government will push up unemployment, further delay recovery and make the unions an irrelevance. But Christofias and his advisors have so little understanding of how an economy works that they are under the illusion their job-destroying counter-proposals will protect the workers.